News Details

Board Authorizes Additional $3 Billion Share Repurchase Program

HCA Holdings, Inc. (NYSE: HCA) today announced financial and operating results for the third quarter ended September 30, 2015.

Key third quarter metrics (all percentage changes compare 3Q 2015 to 3Q 2014 unless noted):

• Revenues increased 6.9 percent to $9.856 billion
• Net income attributable to HCA Holdings, Inc. totaled $449 million, or $1.05 per diluted share
• Adjusted EBITDA totaled $1.815 billion
• Cash flows from operations totaled $1.101 billion
• Same facility equivalent admissions increased 3.6 percent, while same facility admissions increased 2.9 percent
• Same facility revenue per equivalent admission increased 1.9 percent
• Same facility emergency room visits increased 5.8 percent

The HCA Holdings, Inc. Board of Directors has authorized an additional share repurchase program for up to $3 billion of the Company’s outstanding common stock. Repurchases will be made in accordance with applicable securities laws and may be made at management’s discretion from time to time in the open market, through privately negotiated transactions, or otherwise. The repurchase program has no time limit and may be suspended for periods or discontinued at any time. Including both this program and remaining amounts under the Company’s May 2015 $1 billion share repurchase authorization as of October 23, 2015, the Company has approximately $3.235 billion currently authorized for share repurchases.

Revenues in the third quarter increased to $9.856 billion, compared to $9.220 billion in the third quarter of 2014. Net income attributable to HCA Holdings, Inc. totaled $449 million, or $1.05 per diluted share, compared to $518 million, or $1.16 per diluted share, in the third quarter of 2014. Third quarter 2015 results include legal claim costs of $77 million, or $0.12 per diluted share, and losses on sales of facilities of $2 million. The third quarter 2014 results included losses on sales of facilities of $12 million, or $0.02 per diluted share. Adjusted EBITDA totaled $1.815 billion compared to $1.828 billion in the third quarter of 2014. Adjusted EBITDA is a non-GAAP financial measure. A table reconciling net income attributable to HCA Holdings, Inc. to Adjusted EBITDA is included in this release.

On October 21, 2015, the Circuit Court of Jackson County, Missouri ruled that the Company was liable for prejudgment interest, from the date the lawsuit was filed, in connection with the Company’s previously disclosed suit against it by the Health Care Foundation of Greater Kansas City. Legal claim costs of $77 million ($49 million net of taxes), representing that prejudgment interest, have been recognized in the Company’s consolidated income statements for the quarter and nine months ended September 30, 2015 (these costs had not been recognized in the Company’s October 14, 2015 preview of its third quarter operating results, as the Court’s ruling occurred subsequent to the issuance of the preview release). Once final judgment is entered, the Company plans to pursue an appeal.

Same facility equivalent admissions increased 3.6 percent in the third quarter of 2015 compared to the prior year period. Same facility admissions increased 2.9 percent compared to the prior year period. Same facility emergency room visits increased 5.8 percent in the third quarter of 2015, compared to the prior year period. Same facility inpatient surgeries increased 1.6 percent, while same facility outpatient surgeries increased 1.2 percent in the third quarter of 2015 compared to the same period of 2014. Same facility revenue per equivalent admission increased 1.9 percent in the third quarter of 2015 compared to the third quarter of 2014.

During the third quarter of 2015, salaries and benefits, supplies and other operating expenses totaled $8.059 billion, or 81.8 percent of revenues, compared to $7.438 billion, or 80.7 percent of revenues, in the third quarter of 2014.

Nine Months Ended September 30, 2015

Revenues for the nine months ended September 30, 2015 totaled $29.429 billion compared to $27.282 billion in the same period of 2014. Net income attributable to HCA Holdings, Inc. was $1.547 billion, or $3.60 per diluted share, compared to $1.348 billion, or $2.98 per diluted share, for the first nine months of 2014. Results for the nine months ended September 30, 2015 include gains on sales of facilities of $2 million, losses on retirement of debt of $125 million, or $0.18 per diluted share, and legal claim costs of $77 million, or $0.11 per diluted share. Results for the nine months ended September 30, 2014 included gains on sales of facilities of $20 million, or $0.03 per diluted share, losses on retirement of debt of $226 million, or $0.32 per diluted share, and legal claim costs of $78 million, or $0.11 per diluted share.

Balance Sheet and Cash Flows from Operations

As of September 30, 2015, HCA Holdings, Inc.’s balance sheet reflected cash and cash equivalents of $588 million, total debt of $29.752 billion, and total assets of $31.896 billion. During the third quarter of 2015, capital expenditures totaled $567 million, excluding acquisitions. Cash flows provided by operating activities in the quarter totaled $1.101 billion compared to $1.128 billion in the third quarter of 2014. The $27 million decline in cash flows from operating activities related primarily to an increase of $42 million in net payments for income taxes for the third quarter of 2015 compared to the third quarter of 2014.

The Company repurchased approximately 5.077 million shares of its common stock during the third quarter of 2015 at a cost of $446 million. The Company had approximately $614 million remaining on its May 2015 $1 billion share repurchase authorization at September 30, 2015. Year-to-date through September 30, 2015, the Company has repurchased approximately 17.629 million shares at a cost of $1.386 billion.

As of September 30, 2015, HCA’s leverage ratio as measured by Total Debt/Adjusted EBITDA was 3.84x, compared to 3.96x as of December 31, 2014. As of September 30, 2015, HCA operated 168 hospitals and 114 freestanding surgery centers.

2015 Guidance

For the year ending December 31, 2015, Adjusted EBITDA is now expected to be approximately $7.8 billion and Adjusted earnings per diluted share is expected to be in the range of $5.20 to $5.25 per share.

The Company’s 2015 guidance contains a number of assumptions, including:

• The Company estimates approximately 6 to 7 percent of Adjusted EBITDA would be attributable to the Patient Protection and Affordable Care Act (Health Reform Law);
• EHR incentive income of $40-$50 million and EHR expenses in a range of $30-$40 million, as compared to EHR incentive income of $125 million and EHR expenses of $112 million in 2014;
• Completion of $1 billion share repurchase authorized in February 2015, but does not include repurchases under the additional $1.0 billion authorized in May 2015 or the new $3 billion share repurchase authorization announced today;
• An increase in share-based compensation expense to approximately $240 million (was $224 million) from $163 million in 2014;
• Guidance excludes the impact of items such as, but not limited to, gains or losses on sales of facilities, losses on retirement of debt, legal claim costs and impairments of long-lived assets; and
• Guidance does not include any anticipated contribution in 2015 from certain items which impacted 2014 Adjusted EBITDA, including: (i) a $142 million increase to Medicaid revenues reflecting payments in excess of our estimates for the indigent care component of the Texas Medicaid Waiver Program for the program year ended September 30, 2013, and recorded in the 2^nd quarter of 2014, and (ii) $90 million in Medicare revenues recorded in 3Q 2014 in settlement for certain claims denied by Recovery Audit Contractors (“RAC”).

Earnings Conference Call

HCA will host a conference call for investors at 9:00 a.m. Central Daylight Time today. All interested investors are invited to access a live audio broadcast of the call via webcast. The broadcast also will be available on a replay basis beginning this afternoon. The webcast can be accessed at: https://event.webcasts.com/starthere.jsp?ei=1080185 or through the Company’s Investor Relations web page, www.hcahealthcare.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include statements that do not relate solely to historical or current facts and are subject to finalization of the Company’s third quarter financial and accounting procedures. Forward-looking statements can be identified by the use of words like “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “initiative” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. These factors include, but are not limited to, (1) the impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, (2) the effects related to the implementation of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “Health Reform Law”), possible delays in or complications related to implementation of the Health Reform Law, court challenges, the possible enactment of additional federal or state health care reforms and possible changes to the Health Reform Law and other federal, state or local laws or regulations affecting the health care industry, (3) the effects related to the continued implementation of the sequestration spending reductions required under the Budget Control Act of 2011 (the “BCA”), and related legislation extending these reductions, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending reductions, (4) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (5) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (6) possible changes in Medicare, Medicaid and other state programs, including Medicaid upper payment limit programs or waiver programs, that may impact reimbursements to health care providers and insurers, (7) the highly competitive nature of the health care business, (8) changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under managed care agreements, the ability to enter into and renew managed care provider agreements on acceptable terms and the impact of consumer driven health plans and physician utilization trends and practices, (9) the efforts of insurers, health care providers and others to contain health care costs, (10) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (11) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (12) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (13) changes in accounting practices, (14) changes in general economic conditions nationally and regionally in our markets, (15) the emergence and effects related to infectious diseases, including Ebola, (16) future divestitures which may result in charges and possible impairments of long-lived assets, (17) changes in business strategy or development plans, (18) delays in receiving payments for services provided, (19) the outcome of pending and any future tax audits, disputes and litigation associated with our tax positions, (20) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (21) our ongoing ability to demonstrate meaningful use of certified electronic health record technology and recognize income for the related Medicare or Medicaid incentive payments, and (22) other risk factors described in our annual report on Form 10-K for the year ended December 31, 2014 and our other filings with the Securities and Exchange Commission. Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

All references to “Company” and “HCA” as used throughout this release refer to HCA Holdings, Inc. and its affiliates.

HCA Holdings, Inc.
Investor Contact:
Mark Kimbrough, 615-344-2688
or
Media Contact:
Ed Fishbough, 615-344-2810